All-In PodcastE67: Revisiting Rogan, Canadian truckers' protest, fusion breakthrough, $MSFT's savvy move & more
EVERY SPOKEN WORD
150 min read · 30,152 words- 0:00 – 1:30
Bestie Intro: Phil Hellmuth found a new billionaire
- JCJason Calacanis
We had a, uh, nice dinner. Chamath hosted a little, uh... Uh, we played a little bit of the cards, and there's this new kid there.
- CPChamath Palihapitiya
Oh, big shout out to (beep) co-founder of (beep) .
- JCJason Calacanis
Is there.
- CPChamath Palihapitiya
Great guy.
- JCJason Calacanis
I'm like, " (beep) , how do you wind up here at the game, uh, sitting here, you know, uh, having a beautiful dinner with us?" And he's like, "Well..." And then Chamath goes... and he points to (laughs) Helmuth. Helmuth-
- CPChamath Palihapitiya
Helmuth.
- JCJason Calacanis
... found a billionaire. When Helmuth finds a billionaire, what happens?
- DSDavid Sacks
(laughs)
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
He's tied to the hip. He has like a billionaire bromance that he's lost.
- DSDavid Sacks
He's a bi- he's a billionaire wrangler.
- CPChamath Palihapitiya
Helmuth is like one of those truffle dogs in like, you know-
- DSDavid Sacks
(laughs)
- JCJason Calacanis
Very much so.
- CPChamath Palihapitiya
... Alba in Italy. You know, you send him out into the woods, he forages around, he finds-
- JCJason Calacanis
Finds a billionaire.
- CPChamath Palihapitiya
He finds a truffle, just digs it out.
- DSDavid Sacks
(laughs)
- JCJason Calacanis
And that's it. It's like he... And then he follows. Like a dog, he follows the billionaire around.
- CPChamath Palihapitiya
And then he sits there, tail wagging, tail wagging. Yeah.
- JCJason Calacanis
Tail wagging.
- CPChamath Palihapitiya
Waiting for his owner to show up and pick this little billionaire off the ground. "Hey, here's another one."
- JCJason Calacanis
"Look, daddy, see?" (laughs)
- DSDavid Sacks
Oh, God.
- CPChamath Palihapitiya
Unbelievable.
- JCJason Calacanis
"I found another billionaire."
- CPChamath Palihapitiya
Helmuth, Helmuth is the most insecure person, but he's such a beautiful human being. I mean, it's just-
- JCJason Calacanis
He's a great human.
- CPChamath Palihapitiya
It's like, it's like the tale of two people. He's... He really is a walking case of schizophrenia and narcissism, just...
- DSDavid Sacks
(laughs)
- 1:30 – 3:58
Chamath's new camera positioning
- NANarrator
- JCJason Calacanis
Hey, everybody. Hey, everybody. Welcome to another episode of the All In podcast. With us again, the new chairman and majority shareholder of Laura Piana, Chamath Palihapitiya, and the viceroy of veganism.
- CPChamath Palihapitiya
Do you like my thin cashmere gilet that I'm wearing?
- JCJason Calacanis
Gilet? (laughs)
- CPChamath Palihapitiya
Gilet.
- JCJason Calacanis
Do, do you mean polo?
- CPChamath Palihapitiya
No, gilet.
- JCJason Calacanis
Oh, gilet. Okay. Magnifique. Uh, also with us, the viceroy of veganism, the sultan of science, David Friedberg, and the regent of the right wing-
- DSDavid Sacks
(laughs)
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
... David Sachs.
- CPChamath Palihapitiya
The viceroy of vegans. Wow.
- JCJason Calacanis
Viceroy of vegans. It came to me in the shower today. I was like, "You know what? He needs a new one."
- CPChamath Palihapitiya
I switched my background, guys. Do you like it? I just flipped the camera to look the other way, just to mix it up a little bit.
- DSDavid Sacks
Now we can see your chef picking the vegetables in your garden.
- CPChamath Palihapitiya
Oh, yeah. Well, before you used to see him pick the herbs.
- DSDavid Sacks
Yeah.
- JCJason Calacanis
Yes.
- CPChamath Palihapitiya
Because the herbs are on this side.
- DSDavid Sacks
Yeah.
- CPChamath Palihapitiya
But now he's... Yeah, you can see him pick the veggies on this side.
- JCJason Calacanis
Oh, yeah. Oh, there's the sous chef. Okay, there's the prep chef.
- DSDavid Sacks
(laughs)
- JCJason Calacanis
And there's the head chef. Okay, yes, everybody showed up today. Okay, great.
- CPChamath Palihapitiya
(laughs)
- DSDavid Sacks
You know, you seem to enjoy the food, Jason. Every time you come- Yeah, don't complain.
- CPChamath Palihapitiya
... you talk all this shit, but you are always eating when you're at my house. You're always eating.
- JCJason Calacanis
Who's the first, who's the first to RSVP after Phil Helmuth?
- DSDavid Sacks
I'll have- He's not just eating, he's sending his notes to the kitchen. "Could you just do this a little differently?"
- JCJason Calacanis
(laughs) I do give notes.
- 3:58 – 30:04
Revisiting the Joe Rogan/Spotify situation, racism claims, and the video controversy
- JCJason Calacanis
so, uh, we covered Rogan on Spotify in episode 66 a whole bunch. Since that time, uh, a video surfaced on Saturday, uh, with Joe Rogan repeatedly saying, uh, a dir- well, the N-word and, uh, it's, um, pretty rough to watch, and he, uh, did a mea culpa, an apology. And overall now Spotify has taken down 70 episodes of his podcast. You know, that's out of over 1,000.
- CPChamath Palihapitiya
I thought it was like 113. That's the, that's the... That's what I saw on Twitter. There's 113 to- maybe 70 had the N-word, but 113 total.
- JCJason Calacanis
Oh, okay, yes, you're correct. I, I stand corrected. 110 have been taken down.
- CPChamath Palihapitiya
I was texting with Sachs, it's like, it's like almost 6% of all of his episodes they took down.
- JCJason Calacanis
Yeah, so-
- CPChamath Palihapitiya
Something like that.
- DSDavid Sacks
Yeah, but not all, not all of them were because of that language.
- CPChamath Palihapitiya
No, that's what I'm saying, but 6% were taken down.
- JCJason Calacanis
6% taken down. In his apology, he said, uh, obviously he was wrong, uh, to use that word for the decade or so, but he pointed out that he did not use it towards a person as a slur, but was talking about it more, uh, in studying or discussing the N-word.
- CPChamath Palihapitiya
Use versus mention, is that right? Is that the distinction?
- DSDavid Sacks
Yeah, or use versus quoting.
- JCJason Calacanis
Yeah, so he said it was taken out of context, apologized. Um, he also made a, uh, joke that he immediately said, "Oh my God, that's pretty racist. I shouldn't have told that joke," where he, uh, compared, uh, going to see Planet of the Apes in an all-Black theater in Philly, saying he was in Africa. On Sunday, Daniel Ek sent a memo to Spotify employees claiming he is not the publisher of the Joe Rogan show, something I completely dispute. We'll talk about that in a moment. Thoughts on the latest brouhaha, and do we think that Spotify will be able to handle, uh, this? What seeming... It seems to have died down over the last couple of days, uh, and Rogan is now joking about it in his comedy. Uh, h- uh, you know, engagements at small comedy clubs. What do you think, Sachs?Is Joe Rogan gonna weather the storm? Is Spotify gonna stick with him?
- DSDavid Sacks
Well, okay, so as of the last episode of the all-in pod, uh, they were trying to cancel Rogan for misinformation. And for the reasons we discussed, that basically failed because, you know, so many of the times something starts as misinformation, it eventually becomes the truth. Rogan seemed like a guy who actually just wants to present both sides, pre- present a balanced viewpoint. In any event, that whole attempt to cancel him based on misinformation was fizzling out. And then lo and behold, this 22-second clip comes out, and they escalate the charges to racism. If you kinda look at, um, you know, who's behind this clip, it's pretty clear that it was a Democratic Super PAC put this together and sort of AstroTurfed it as a viral video. This is part of an organized attempt to cancel Rogan. Now, as to the merits of the, the sort of racism accusation against him, I mean, look, let me say that I don't think anybody, especially a public figure, should be using this kinda language, um, you know, in this day and age. Even if you're just sort of quoting something or, or mentioning it, you know, he, he shoulda, he should, he should've known better. Um, however, there are also similar clips that are now circulating of Joe Biden doing the same thing, using this type of, like, incredibly incendiary language in like a brazen, almost offhanded way. You've got clips of Howard Stern-
- JCJason Calacanis
Hold on a second. Wait, wait. You're saying brazen, and he, he said it exactly the same way as Joe Biden did, which is-
- DSDavid Sacks
I would say maybe in a cavalier way. He's, he's. But let me, let me come back.
- JCJason Calacanis
Yeah.
- DSDavid Sacks
So you have, you have Biden doing it. You've got Howard Stern doing it. Um, so what is the difference? I mean, the, the, the reality here is that, uh, we used to, in our culture, have a distinction between the use of this type of language as an epithet, which was never okay. Uh, or using it, um, uh, you were referencing it. You might've been quoting it. You might've been quoting a, a rap song. You might've been quoting a Dave Chappelle routine. You might be reading from a book. The, you know, might've been telling a story in which somebody else has said it, and you're merely trying to relay what happened. The rules today are that's not an excuse. You can't say it.
- JCJason Calacanis
Yeah.
- DSDavid Sacks
But the truth is that 10 years ago, 20 years ago, the rules were a little different. That's why Biden said it. That's why Howard Stern has these episodes, and I think it's why Rogan had said it. And I think it's a little bit disingenuous, uh, for people to now try and apply the new rules to this old language. And they're doing it very selectively, because they're not trying to cancel these other people who've said these things under the old rules. They're trying to cancel Rogan. So I think what you're seeing here is selective cancellation outrage, selective application of these new language rules for the purpose of getting Rogan canceled. Why? For the same reasons we were talking about two weeks ago, or last week, which is he's an outsider, he's an independent voice, he bucks the establishment, he doesn't present the orthodox view on COVID, and that's frankly why they want to cancel him.
- JCJason Calacanis
Friedberg.
- DFDavid Friedberg
I'm just looking at the Howard Stern qu- quote. So in 1993, Howard Stern, um, dressed in blackface and used the N-word in a skit he did, uh, mimicking Ted Danson, talking about Whoopi Goldberg, som- something. And he said, "I'll be the first to admit I won't go back and watch those old shows. It's like, 'Who is that guy?' But that was my shtick. It's what I did, and I own it. I don't think I got embraced by Nazi groups and hate groups. They seemed to think I was against them too." So, uh, I think, you know, Sacks is probably right. I mean, Howard Stern's a very different character today. You know, I think the question of if Howard Stern acted that way today, would cancel culture kind of mob him, the answer is probably yes. Um, but I think it's because, uh, you know, Rogan is out here probably picking a bone with everyone. You know, he's kind of... There, there's, there's no alignment. There's no... There's no tribal, uh, behavior with Rogan, right? He doesn't... He, he's been pretty public about being very liberal. He's been very public about being conservative in some ways. And I don't think he kind of aligns himself strongly with anyone, and so he's a threat to everyone. He's got a huge following, and, you know, he speaks openly and honestly in a way that, uh, that is threatening. Uh, certainly his behavior was inexcusable and has been inexcusable, but there are others, right? And so, it's, it's a, it's an important question, which is, why him? Why now?
- JCJason Calacanis
It's also interesting about Ted Danson, he was dating Whoopi Goldberg at the time-
- DFDavid Friedberg
Mm-hmm.
- JCJason Calacanis
... I believe.
- DFDavid Friedberg
Mm-hmm.
- JCJason Calacanis
And Ted Danson ha- uh, was... There was a roast of Whoopi Goldberg at the Friars Club, and Ted Danson dressed in blackface, I think, whi- which Whoopi Goldberg was in on.
- DFDavid Friedberg
Oh, Ted Danson dressed in... Didn't Howard dress...
- JCJason Calacanis
And then Howard did a send-up of that.
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
Anyway, the, the point is the moral... The, the, the standard has changed significantly. Let's let Ch- Chamath chime in.
- 30:04 – 45:00
Canadian truckers' "Freedom Convoy": root causes, impact, what is this turning into?
- JCJason Calacanis
truckers, uh, are protesting, as many of you know, uh, vaccine mandates. Just breaking today, Ontario's, uh, premier has declared a state of emergency...... for the entire province and, uh, Ottawa Police have braced for thousands of protestors to descend for the third consecutive weekend. USA Today also reported the convoy could disrupt the Super Bowl, Biden's State of the Union, et cetera. The protest has been self-titled The Freedom Convoy and has been underway since January 29th, 29th. It appears it, uh, has spanned several thousand vehicles across the country and the truckers are blocking key roadways and bridges, including the Ambassador Bridge. Uh, they're seeking an end to Cana- Canada's, uh, vaccine mandates, and it feels like this is now morphing into something a little bit wider than just vaccine mandates. Uh, maybe it's becoming a Occupy Wall Street type of, uh, protest open to many people with many different, uh, things that they have, uh, grievances about. A reporter from, um, Bari Weiss's Common Sense newsletter/media operation, uh, wrote what the truckers want.
- CPChamath Palihapitiya
Jason, you're, you, you just nailed it. Um, I do think that this is actually Occupy Wall Street.
- JCJason Calacanis
2.0, yeah.
- CPChamath Palihapitiya
Look, n- it, it, uh, it turned out, just to get at some roots and facts, so it's not just truckers. This is a broad-based coalition of people across every single race and gender and age group in Canada that's participating in this thing. In fact, the Bari Weiss article, you know, she profiled men, women of all ages, Sikhs, you know, whites, I mean, everybody, Blacks. There was... So there's a, there's a coalition of people. Second is this really isn't about vaccination rates because it turns out truckers are 90% vaccinated. They're vaccinated at a higher percentage than the actual broad-based population of Canada, which is about 78%. I think the, the point of this, and again, I care about this so much as a Canadian, but I, I just want to read a quote from Justin Trudeau because I think it encapsulates what this is really about. The quote is, "The small fringe minority of people who are on their way to Ottawa, who are holding unacceptable views that they are expressing, do not represent the views of Canadians." And I think it's that phrase unacceptable views that really points to what the real issue here is, which is that there are a lot of people who now say, "It's been two years, enough with mask mandates, enough with all of this, you know, almost police state that's developed, all of the emergency used power that politicians have taken, let's reclaim our democracy and let's have, you know, freedom again." And under the political viewpoint of the ruling Liberal Party, which by the way is now going into revolt as well, a bunch of Liberal MP's have just completely flipped because of this statement. It summarizes what Trudeau is saying, which is, "What you believe is unacceptable to me and so now I will quash you. I will-"
- JCJason Calacanis
Or that Canada has one viewpoint. Uh, Freeburg?
- DFDavid Friedberg
Did any of you guys listen to the New York Times daily podcast that our friend sent out the link to this morning?
- JCJason Calacanis
Yes.
- DFDavid Friedberg
You know, to me, these are the same story. It was, uh, actually, uh, um, a-an interview, uh, with a reporter, uh, who highlighted some work that she had done and identified that Phil Murphy, the, uh, the Democratic, uh, Governor of New Jersey had done some, uh, uh, some, some polling and some, some focus group discussions, uh, with some of his constituents. And the overriding tone was one of emotion, one of feeling left out of the life that they believed they should've been living over the past two years. And ultimately, I think the tone speaks very clearly to what the truckers are saying, which is everyone feels more than ever incredible overreach into their personal lives by the government. Um, and by different governments, whether it's local or federal here in the US or by this Canadian government or, you know, go to Australia or the UK and the sentiment seems to be similar everywhere. I don't think that any time since World War II have we seen the government create such restrictions and such mandates in, in democratic republics, uh, like the United States, um, that we just saw over the past two years. And I think the fact that it's continuing when folks are now seeing, you know, on the ground every day, uh, you know, the, the mildness of Omicron or, like, you know, the big, the challenges that their kids are facing in school. And you kind of put these things together and you say to yourself, "Why is my government restricting my life and causing the challenge that I'm being forced to face? For what?" And I think that's a tone that everyone feels everywhere in the West today. I, I think in the East it's a little bit different, right? Um, uh, because of the, uh, the mindset there, but I think here it's very-
- JCJason Calacanis
Collectivism, yeah.
- DFDavid Friedberg
Collectivism. And I think here, we're, we pride individual liberty and freedom as kind of the foundation of these democracies, uh, to have the government tell us what we have to wear, shots we have to put in our arms, where we can go and when, how we can behave in ways that were never legislated, in ways that-
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
... were never kind of debated and discussed publicly, uh, just feels overreaching at this point. I think everyone's hit their breaking point. And this is another one of these examples, this trucking thing is another one of these examples of people manifesting their breaking point.
- JCJason Calacanis
And Sax, to the point we've been discussing over and over again, things have changed radically since the beginning of the pandemic. You believed in mask mandates early because, hey, no downside, we talked about that, and we didn't want hospitals to be overrun, which is reasonable, right? You wanted to have oxygen, we were all, you know, trying to make plans for, "Hey, how bad is this gonna be?" But we're sitting here two years later and it's pretty clear Omicron, which I had, uh, thank you Sax, um, is, is a nothing burger-
- CPChamath Palihapitiya
Yeah. Thank you, Sax.
- JCJason Calacanis
... as we said here. Thanks, Sax.
- CPChamath Palihapitiya
Thanks a lot, Sax.
- DFDavid Friedberg
Saxicron.
- JCJason Calacanis
I helped you. I helped you.
Saxicron-
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
... made me a superhero.
- DFDavid Friedberg
(laughs)
- JCJason Calacanis
Thank you.
- CPChamath Palihapitiya
All I've ever gotten is sick when I've been around you.
- JCJason Calacanis
Yeah, I went to Sax's party-
- DFDavid Friedberg
(laughs)
- JCJason Calacanis
Boo.
... and all I got was an $8,000 gift bag and Omicron.... uh, the gift bag's pretty grand at Sachs's parties, I would say.
- DSDavid Sacks
No, I think, I think getting Omicron helped you because it enabled you to see that this, for you, was largely a nothing burger.
- JCJason Calacanis
Yes.
- 45:00 – 54:15
Nuclear fusion breakthrough: Friedberg shares thoughts and theories on what this could mean for the future of energy and life on Earth
- DSDavid Sacks
listening.
- JCJason Calacanis
Okay, Friedberg, we made some great progress in science this week in nuclear fusion. Do you wanna tee this up for us?
- DFDavid Friedberg
I'm happy to. So let me just give a little background for maybe a minute on, on fusion. So, you know, the, um, the way energy is made in the sun and in all stars is through this process of nuclear fusion where hydrogen, uh, nuclei, the, the protons inside of hydrogen atoms shoot around at such a high energy and they're so dense because of the amount of hydrogen, it'll cause this gravity to pull them all together, they get really dense. They start slamming into each other. When they slam into each other, they fuse into helium and ultimately into heavier elements and release energy in the process, and that is what fusion is. So, you know, we talk about nuclear energy on Earth. All nuclear energy that we generated on Earth, uh, as a species to date has been through fission where we take much heavier elements like plutonium and uranium and bre- they break apart by squeezing them together and they release energy, but this creates radioactive material, it's dangerous, it's very, very expensive and so on. So the- there's always been a question since roughly the 1950s on whether or not we could cr- recreate the conditions of the sun or stars on planet Earth by creating a plasma, by creating the same sort of plasma that exists inside of stars, very hot, very fast, very dense hydrogen that can slam into itself and slam into atoms and fuse into helium and release energy.
- CPChamath Palihapitiya
Does that same plasma exist on Uranus?
- DFDavid Friedberg
Uh-huh.
- JCJason Calacanis
(laughs)
- DFDavid Friedberg
(laughs) Yeah. Yeah.
- DSDavid Sacks
(laughs)
- JCJason Calacanis
God, you, you're gonna give him a wedgie. Let science boy finish. Come on.
- DFDavid Friedberg
Oh, sorry. Back to you.
- DSDavid Sacks
Never gets old.
- JCJason Calacanis
Was it 69 megajoules or 420 megajoules? Go ahead, sorry.
- DFDavid Friedberg
Yeah. So plasma fusion's always been this kind of Holy Grail of energy because if you can actually generate plasma fusion, the amount of energy it takes to create the plasma is less than the energy that comes out of the plasma, so it's, it's effectively inf- inf-
- JCJason Calacanis
Net positive.
- DFDavid Friedberg
... infinite, free, cheap plasma. And so the, the system that people have been building for the last 25, 30 years is these, uh, these donut shaped systems called tokamaks. They're, they're, they, they're like a, a circle or like a donut and they spin the plasma around inside and so it takes a lot of energy and magnets and so on to try and make this work. You know, there's a company we talked about a few months ago called Commonwealth Fusion Systems which uses a new superconducting material to control that plasma and use... instead of using expensive magnets, and they just raised $1.8 billion. And, uh, you know, more recently, uh, the Joint, um, European Torus, which is managed by the, uh, the Atomic Energy Authority in the United Kingdom, uh, just this week demonstrated, um, energy output, uh, from their tokamak plasma fusion system where they generated, you know, 59 megawatts of, of energy in five seconds, uh, which is, um, a record. Uh, the prior record was set in 1997 by that same agency. They generated 16 megawatts, uh, of power output. So it, it was a great breakthrough. And, you know, to make this all possible has required, uh, technical breakthroughs in electronics, uh, technical breakthroughs in sensors, in computing, in hardware, in material science, in superconductors. And so all of this is starting to coalesce that plasma fusion might actually become a reality. And the ITER system, which is the biggest construction project in Europe, 35 nations have contributed a total of roughly $50 to $60 billion to make this system.... um, is, uh, is gonna go online around 2027. They've been building it for 20 years. It's gonna be a 500 megawatt demonstration system and if it works, then it opens up the door that in the future we may actually be able to turn plasma fusion into an energy source for all of humanity. It basically would use water. Plasma fusion is made from taking hydrogen, which you would get from water, spinning it around, heating it up, getting it to be really, really dense, and ultimately deriving power out of it. The implications are extraordinary, right? So over the next few decades, it is appearing more likely that we will have plasma fusion systems working on Earth. And as that happens, energy becomes free and it becomes unlimited. And with unlimited free energy, we can terraform Earth, right? We can take, uh, uh, ocean water, desal it, turn it into fresh water. We can pump that into deserts, turn them into rainforests. Um, you know, the total annual production of energy on Earth today is about 170 terawatt hours. That amount of energy could be generated from just a 10 foot by 10 foot by 10 foot cube of water. Um, that's the amount of energy, the amount of material that would be turned into photons that would drive all of the electricity we need on Earth. So it's an incredible technology, an incredible breakthrough. We're starting to see this stuff happen. One area that I wanted to kinda just highlight which no one talks about, but which I think is extraordinarily, um, important about 100 years from now let's say. As these plasma fusion systems work, it's certainly gonna be, um, true that we'll have abundant free energy during the back half of this century and that'll change everything. We'll decarbonize the atmosphere, we'll terraform the planet, we can make whatever we want, we can build things, et cetera. But the same system of plasma fusion theoretically could be used to fuse heavier elements than just helium. So fast-forward 100 or 200 years, if we can actually make plasma fusion systems work, we could also... And to, to make helium, to make energy, we could also use them to make heavier elements like the rare earth metals that we talk about being so important here on Earth to make, um, batteries. Or phosphorous, uh, which, you know, we're gonna run out of on Planet Earth in about 100 years, which is a critical component of agriculture and feeding ourselves. So, you know, over the next, call it, 100 years, plasma fusion systems, I think back half of this century come online, provide us with abundant free energy. And then in the 22nd century, I think this idea of nucleosynthesis, the idea that we can actually make the rare earth or the heavier elements that are limited natural resources here on Earth, where we could turn water into gold, or water into lithium, or water into molybdenum, or, you know, into beryllium or whatever, um, starts to become a reality. Um, and so this, to me, like, I, I feel like we're on the eve of plasma fusion being a reality, you know, based on some of the results we're seeing. And it's, it's one after the other. ITER is gonna come online. You know, Commonwealth Fusion had their, their materials breakthrough and on and on and on. So this seems to be building up. And so the 2030s-
- JCJason Calacanis
And it's gonna hit a tipping point, yeah.
- DFDavid Friedberg
That's right. I think the 2030s and the 2040s are where this becomes real. And all these problems and concerns we have about climate change and carbon in the atmosphere, all of this stuff can be reversed with infinite energy.
- JCJason Calacanis
And so, com-
- DFDavid Friedberg
So I'm optimistic and I'm, I'm, I'm excited about a lot of what we're seeing.
- JCJason Calacanis
Let me ask you one question. Obviously when people start hearing about nuclear reactors and fission, and then they start learning about fusion, they immediately have the Chernobyls of the world and Fukushimas come to mind, and nuclear bombs. In this case, when this reaction occurs, my understanding, I've interviewed a couple people working on these reactors, is that the reaction just fizzles out. It just stops. And then the-
- DFDavid Friedberg
It's not radioactive. So these-
- JCJason Calacanis
Right.
- DFDavid Friedberg
... thes- these are not radioactive materials that naturally decay into radioactive, um, ions or, or particles that can, uh, damage the body or damage... Uh, the- these are literally just hydrogen atoms that are spun around so hot and smashed into each other. So if the machine breaks, everything just turns off. That's it.
- JCJason Calacanis
And the output, even when it's working, my understanding is, some natural, uh, like just air and water. (laughs) So-
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
... there's no output. There's no-
- DFDavid Friedberg
There's nothing radioactive.
- JCJason Calacanis
Am I correct? There's-
- DFDavid Friedberg
There's no environmental-
- JCJason Calacanis
There's nothing to deal with.
- 54:15 – 1:01:01
Contrarian energy trade, Chamath's Big Tech play morphing into a long-term investment
- JCJason Calacanis
he's got bills.
- DFDavid Friedberg
By the way, a big part of, um, the, you know, just speaking markets for a second, I mentioned to you guys at the end of last year that I made a bet on energy stocks.And the reason I made a bet on energy stocks is because some of the breakthroughs that we're seeing in decarbonization and renewable energy has driven a reduction in capital improvements across energy infrastructure, because people are so optimistic about what's over the horizon and they're so pessimistic about carbon-intensive energy systems, that we actually have underinvested over the past few years in energy infrastructure that it's turning out today is critically needed. So, while this is a great long-term kind of optimistic world scenario and it's gonna decarbonize energy production and energy systems, in the near term, we're actually struggling a bit to meet our energy demands. And there's a lot of leverage that energy producers have over those that are the consumers, as we are seeing currently with the Russia-Ukraine-Europe crisis and so on. And so part of the reason for the climb in energy stocks over the last couple of weeks has been largely driven by the fact that we're realizing that this underinvestment in CapEx has created a decline in productivity of these assets relative to the demand. And so suddenly everyone's like, "Oh my gosh, these things are gonna be able to charge more, commodity prices are going up," and so on. So, you know, it's very hard to think about playing an investment cycle around this stuff because in the near term there's still significant demand and we only have carbon-intensive systems to produce energy.
- JCJason Calacanis
Well, I was gonna ask you, Tremov, if... Does this mean on an investment thesis, you might see a massive spike in carbon-based fuel systems and these-
- CPChamath Palihapitiya
No.
- JCJason Calacanis
... sovereign wealth funds and then a dramatic drop-off?
- CPChamath Palihapitiya
No.
- JCJason Calacanis
Okay. What do you predict will happen?
- CPChamath Palihapitiya
The... Nobody will support anybody investing in pulling more oil out of the ground. They'll, they'll support trying to get more from what we have, um, but, you know, I, I don't know if y- ... I don't know if you guys saw, but, you know, um, there's no support for this. Whether you're an investor and you go activist on some of these oil companies, you know, whether you're... I think the- ... Biden had a big setback because, you know, he had cleared a whole, like, millions of acres of offshore land for, uh, some qui- some kind of energy extraction that was then just reversed by the courts. No, n- nobody has support for this though, so...
- DFDavid Friedberg
But that's a g- It's... But what you're saying is exactly right and it's exactly the reason oil prices are climbing. I just sent you guys a link to, to what's going on today.
- CPChamath Palihapitiya
They're... But they're climbing for the wrong reasons. So look, let, let, let's just be realistic here. We, you know, we have a cartel, it's called OPEC, you know, uh, and what they do is they decide output. And we have some bal- checks and balances to OPEC, namely Russia and a few other actors who will try to then regulate, um, supply and demand so that there's mutually assured destruction. The net result of all of that right now is that we do have some constrained supply for the amount that we need to gets... to get back to the level of production we had pre-pandemic. So we are gonna have some sustained energy prices. But you saw something really important this past week. Everybody was waiting for this big CPI print, right? The Consumer Price Index print. Everybody thought it was gonna be a bad number. It was a pretty bad number, but the markets were pretty responsive to it. And, um, and then it's been pretty responsive the rest of the week, despite a whole bunch of stuff. I don't know if you guys saw, but, like, yesterday there was this crazy article where, you know, one of the Fed governors was like, "We should raise by 100 basis points by July, and, you know, we should do eight, eight raises." And, and the markets were like, "What are you talking about?" And why is that? Because now people have started to look... You know, I've, I've mentioned this before. When you go into a rate cycle, we're kind of past worrying about how many. We kind of look to the end and decide what we want to believe about the future, and one of the most interesting things is the rate of change of this inflation was actually lower month over month. And so if you think about it that way, we had a bad CPI print, but it's actually not going up as much and in fact it's starting to trail off. And a lot of economists now forecast basically this inflation peaking or already having peaked over the last few weeks. Consumer sentiment is not so good. A lot of us are now shifting our consumption away from goods to more services. We're s- we're stopping, you know, the hoarding of the toilet papers of the world, if you will, and so I'm not a big buyer of this trade, to be honest with you, Freidberg. I think that it works in the short term. I don't think it's an investment. I think at some point you're gonna have to make a decision about what your view on energy is. I don't know-
- DFDavid Friedberg
No, I, I agree. I don't think this is a long-term trade.
- JCJason Calacanis
It's a trade, not an investment.
- DFDavid Friedberg
Yeah. That's right. But I do... I do... I do think that the macro sentiment sent the market in one direction and creates this opp- It, it created a buying opportunity, which I was pretty clear about. And I do think that some of this global tension stuff we're seeing is only gonna drive it up for a while. So-
- CPChamath Palihapitiya
I do... I do think, however, that the, the, uh, this, uh, big tech spread trade is moving from a trade to an investment actually, and that I didn't expect. And the reason is, I talked to a bunch of folks on Wall Street over this past week and they told me two things, and one of them is a segue 'cause I think we should talk about Microsoft, which is another brilliant move in the lexicon of business, but what they said was, "Facebook has become a funding short for other investments." Now, what does that mean? Everybody was crowded into big tech. We talked about this before, right? Those five stocks were broadly owned. They were effectively the index. But after that, um, after that earnings report, a lot of investors, including retail investors, had to decide where to reallocate their capital and had to decide where to invest, where the money was gonna come from to invest in these other names that were really beaten up. And what folks on Wall Street have been telling me is that, you know, Facebook has become what's called a funding short, meaning there is no bid to buy that from institutional owners. They'd rather on the margin sell it to generate the cash to then take and invest in other things. And what you saw over this past week is the bottoming out of a lot of these growth stocks that were beaten up, right? They rallied pretty significantly every day, 3, 4, 5, 6% rallies. Um, and other names in big tech have rallied really well, including Microsoft.And, um, and so I, um, I, I think that there is the potential, a small potential that that's going from a trade to an investment actually, a sustainable trend that you can bank on for, you know, several years.
- JCJason Calacanis
Investment, hold the stock for five, 10 years.
- CPChamath Palihapitiya
The trade, that spread trade you can-
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
... hold for long periods then.
- JCJason Calacanis
But for the winners to be c- the winners in that, just so people get refreshed, Google's a winner in that.
- CPChamath Palihapitiya
Microsoft, Google.
- JCJason Calacanis
Microsoft, Google and then you feel Amazon, Facebook obviously, and Netflix are the losers in that trade. Still feel that way?
- CPChamath Palihapitiya
I think that Microsoft and Google are far and away the winners, far and away the winners. And look you saw, you saw,
- 1:01:01 – 1:15:57
Microsoft's savvy "burn it down" app store strategy, US income not keeping up with inflation, consumer sentiment getting worse, opening up and getting back to normal
- CPChamath Palihapitiya
you saw this Microsoft thing today or sorry, this past week. So smart, you know-
- JCJason Calacanis
Yeah, so just to give, catch people up on that-
- CPChamath Palihapitiya
Yeah, it is.
- JCJason Calacanis
... Microsoft has made a, another savvy move to get approval for their $75 billion Activision Blizzard, uh, acquisition. They promised their video game app store would operate with open market principles. CEO of the year, uh, Satya Nadella, uh, and others traveled-
- CPChamath Palihapitiya
Nadella.
- JCJason Calacanis
... to Washing- uh, Nadell, uh-
- CPChamath Palihapitiya
Nadella.
- JCJason Calacanis
... traveled to, Nadella, right, there's an A at the end, um, traveled to Washington this week to meet with regulators regarding the acquisition so they, I guess, are proactively going to Washington as opposed to other people who maybe are not. Quote from Microsoft President Brad Smith, "We are more focused on adopting, adapting to regulation than fighting against it." That's some really interesting kung fu right there, yeah.
- CPChamath Palihapitiya
Look, there's a, there's a famous story about this explorer named Hernando Cortes where, uh, you know, we've all heard this analogy or this, this, this, uh, little phrase before, um, where, you know, when they were exploring, um, coming from Europe and, you know, they hit the Caribbean islands and then, you know, looking for America et cetera. The famous phrase is, "Burn the boats."
- JCJason Calacanis
Yep.
- CPChamath Palihapitiya
Right? Can't go back. We have to find our way in.
- JCJason Calacanis
Make it work.
- CPChamath Palihapitiya
Um, the, the way that that's been extended in business is sort of what we would call scorch the earth. And there's a competitive move that a lot of businesses, if they're smart enough, can execute, which is to effectively take a key market and take an economic view of that market where you say that we're gonna take all the economic value away from it. And I think this is the first step towards a really interesting play that Microsoft could pull, which is essentially to scorch the earth of app stores.
- JCJason Calacanis
Which is Google's and Apple's really big money printer.
- CPChamath Palihapitiya
To make a completely open permissible platform with very little to no take rate, and in a market as big as video games, I think what it does is it creates pressure on all these other mega platforms to essentially copy them. And I think Friedberg mentioned this before, Google has actually been the best in doing this by finding these key markets or I think it was Sax, you know, Chrome and other things and giving them away for free. Google is in a position to make the app store effectively free and then that puts Apple on a little bit of a desert island. So Jason, back to why I think you can keep Apple in that basket of shorts, the competitive pressures are mounting by, by the moves of Microsoft that I think are easier for Google to copy-
- JCJason Calacanis
Mm-hmm.
- CPChamath Palihapitiya
... and very difficult for companies like Apple to copy 'cause it creates an incredible, um, disincentive.
- JCJason Calacanis
Yeah, and also as part of this open app store concept, they would let you use any payment system so if you're on an iPhone and you wanted to use Apple Pay with a Google app purchase, you could do that, and if you're on, you know, Microsoft's, you can use PayPal as an example.
- CPChamath Palihapitiya
Sax, what do you, what do you think about inflation?
- DSDavid Sacks
Okay, there was a really interesting chart on inflation that actually Zero Hedge tweeted and, um, I threw it up in the notes here, where they said, "Real hourly earnings are negative 1.7%. It's the tenth month in a row where US incomes aren't keeping up with inflation." So the problem here is that, you know, people's incomes have increased with inflation but not as much as the inflation rate so the net effect of it is that people are feeling worse off. When they go to the grocery store to buy groceries or whatever they need, they don't feel as rich. That's the fundamental problem here. And I think there's a lot of people out there who think that there's a free lunch, that if we printed two trillion worth of stimulus checks, this is the whole, that $2 trillion bill last year they shoveled through, I think the idea was, "We're gonna print as much money as we can before the election and it's gonna help us in the midterms." Actually, as it turns out, it boosted inflation so much that people are feeling worse off even though their wages went up slightly because on a net basis, their earnings are down. So I just think it's a good reminder that, um, you can't just like print, uh, wealth, you can't print your way to prosperity.
- JCJason Calacanis
No free lunches?
- DSDavid Sacks
There's no free lunches.
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
Or we're gonna create addiction to universal income or universal subsidy. Um, that's the alternative is people are gonna basically try and vote to make some programs that were initially meant to be temporary more permanent in order to keep up the, uh, the lifestyle that they've been, become accustomed to.
- CPChamath Palihapitiya
Just, uh, just to build on Sax's point, uh, the University of Michigan, uh, consumer sentiment was released, I think it was today, this morning, and it shows exactly what he's saying which is that, you know, consumers' propensity and confidence in the economy has been falling off a cliff. You know the month over month change was almost, uh, it was down 8.2%. The year over year change is down almost 20%. Current economic conditions was down 20% and then index of consumer expectations down 19% so to, to Sax's point-
- JCJason Calacanis
People are scared.
- DSDavid Sacks
Yeah, well we've been, we've been talking on the show for the last, I'd say couple of months about balancing the risk of recession versus the risk of inflation. Inflation, I think, has gotten slightly worse. Uh, the print went from, with the last print was like 7.1%, now it's 7.5% so to Chamath's point earlier, it's getting worse but the rate of how fast it's getting worse is slowing-
- JCJason Calacanis
Could be peaking.
- DSDavid Sacks
... but the risk of recession, I think, is increasing because what's keeping this economy going is the consumer, and if the consumer sentiment now all of a sudden is tanking and people feel poorer because of inflation, I just, you know, now the, the, the risks are starting to become more balanced.
- CPChamath Palihapitiya
While our sentiment, as sentiment goes down, this is where governors play a critical role because if they don't open up these economies, we can't actually have a consumer-led consumption rebound of the economy because there aren't any services to buy because you can't actually be around anybody.So if the economy remains effectively closed and people are done buying, you know, tubs of margarine and toilet paper, uh, because, you know, Armageddon isn't coming as we were worried it would, what are we supposed to be doing? So this is how these things interplay. So we have to get these... Again, go- going back to where we started, we have to get this economy open and we have to just get back to some sense of normalcy, and the consumer will lead us out. But I think, Sacks, you're right. On the margin, I think the risk is towards a recession because people don't see this. Thomas Sowell, who's a well-known Stanford... He's a, I think he's a senior fellow at, at Hoover. Um, you know, he, he has this comment which is effectively, taxes are bad for the rich and the poor, but inflation is bad just for the poor. And the reason he says that is because, you know, if you're wealthy, you can transition to assets that are sort of inflation-adjusted or inflation-protected, right? You can consume assets or you can purchase assets to protect yourself. But inflation is an ex- exceptionally regressive means of the government taking compensation away from you, current compensation, and it disproportionally affects working class ordinary people. And so if you have real wages that are negative, inflation that's high, that's confiscatory, right? It, you are, you are meaningfully less well-off than you were before. And, you know, wealthy folks have a way to hedge but normal, ordinary, working-class people do not. And on the margin then, if they then do not go out and spend, the problem will be some sort of recessionary effect.
Episode duration: 1:24:50
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